McGraw-Hill Construction released its 2008 Construction Outlook, which forecasts a drop in overall U.S. construction spending for
next year, fueled by tighter lending conditions and weaker job growth.
McGraw-Hill Construction released its 2008
Construction Outlook yesterday, which forecasts a drop in overall U.S.
construction spending for next year, fueled by tighter lending conditions and
weaker job growth. Against this backdrop, the level of construction starts is
expected to decline 2 percent, to $614 billion, following an 8 percent decline
predicted for 2007.
“The credit crunch that emerged at
mid-2007 continues to be a major concern for construction and the overall
economy,” said Robert A. Murray, vice president of
economic affairs at McGraw-Hill Construction. “As a result, we’re now
predicting downturns in the previously resilient multifamily and commercial
segments, as well as continued weakness in single-family home construction.”
There are some positives for the market in
2008, he noted. Transportation projects should continue to see moderate growth
amid a renewed emphasis on infrastructure maintenance and upgrades,
particularly in the aftermath of the I-35W bridge collapse in Minneapolis.
Financing from public sources will stay generally supportive, and the growth of
public-private partnerships also offers the potential for greater funding.
Finally, growth in “green” construction
practices means that the demand for sustainable building design and materials
will continue to rise.
Highlights of the report include:
will weaken further, given the large inventory of unsold homes and diminished
loan availability to homebuyers. A 3 percent drop in dollar volume is expected,
corresponding to another 6 percent decline in the number of units.
will slide 8 percent in dollars and 11 percent in units, following steeper
declines in 2007. Condominium development is being dampened by greater scrutiny
from lenders as well as reduced homebuyer demand.
will slip 6 percent in dollar volume and 11 percent in square feet. Tighter
lending standards and the slower absorption of space will contribute to a
measured downturn for stores, warehouses, offices and hotels.
will rise 4 percent in dollar volume, while square footage edges up 1 percent.
School construction is expected to strengthen again after its 2007 pause, and
transportation terminals are also expected to grow. The other institutional
structure types, including healthcare facilities, will see a modest loss of
will retreat 11 percent in dollar volume, after a 40 percent surge in 2007 that
featured the start of several unusually costly projects, plus a large number of
ethanol plants. Square footage for manufacturing buildings in 2008 is expected
to advance 5 percent.
construction will move up 3 percent, following the 5 percent gain in 2007.
Highways and bridges are likely to receive greater funding when fiscal 2008
appropriations are approved. The environmental project types should be up
slightly next year, but site work connected to single-family development will
Electric utilities will
see another modest decline in percentage terms, but essentially this project
type is holding at the enhanced level achieved in 2006.
The 2008 Construction Outlook is available
for purchase at www.construction.com/Outlook2008/.